Comment by DiogenesKynikos | Hacker News Reader

Comment by DiogenesKynikos | Hacker News Reader

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DiogenesKynikos

> And China doesn't (didn't?) allow foreign companies to operate in China without a local partner at all.

This is one of the most persistent misunderstandings about China.

China had a closed, planned economy. It began opening up to foreign investment in the 1980s, but not all at once in every sector. China's general approach has been gradual, instead of the "shock therapy" that the ex-Soviet Union went through (which destroyed its economy).

China initially allowed foreign investment in certain sectors, with conditions like involvement of a local joint-venture partner. An example of this was Volkswagen building a factory in Shanghai in 1984, with the Chinese company SAIC as a local partner with 50% ownership.

Over time, the number of sectors that are open to foreign investment has increased (most sectors are now open), and the rules on investment have been loosened. For example, joint-venture requirements in the automotive sector were phased out and completely eliminated by 2022. Tesla completely owns its operations in China. Toyota has announced that it is buying out its JV partner. Other Western automotive manufacturers have taken majority stakes in their operations.

China has been moving towards more openness to foreign investment over time, not less. It does have policies like "Made in China 2025" that are intended to move up the value chain, and avoid getting stuck making low-value plastic toys forever. China wants to be like the US and EU, after all - a developed economy that manufactures lots of high-tech goods.

> China has been moving towards more openness to foreign investment over time

After they lost most of those same foreign investors that got tired of handing over their IP, the "local partnering" (what often resulted in state/court backed judgements against the foreign investors), ...

The disasters "wolf warrior" politics, combined with the above mentioned issues. And the stringent monetary policies limitation on moving money out of China did not help (translation: We want you to put money in, not being able to pull it out).

This has resulted in a reduction of foreign investment by almost 70% (given the 15 year average). What used to be easily be 200 a 250B investments per year, has now dropped to barely 100B, and is still declining.

The IP sharing issue has been massively overblown. IP sharing was relatively limited.

The European and American car manufacturers, for example, never lost their considerable competitive edge over their Chinese rivals. In the end, it was an entirely different technology - electric cars - that allowed the Chinese to leap-frog the legacy car manufacturers, and not because of IP sharing, but because of Chinese R&D in battery technology.

> This has resulted in a reduction of foreign investment by almost 70% (given the 15 year average). What used to be easily be 200 a 250B investments per year, has now dropped to barely 100B, and is still declining.

Foreign investment in China peaked in 2022. The reasons for the decline are cyclical (not just because of China's internal economic situation, but because of international factors like the hike in US Federal Funds Target Rate since 2022), not because China suddenly started demanding IP sharing or suddenly changed its currency rules in 2022 (none of which happened).

>The reasons for the decline are cyclical.

What a nice exercise in public relations.

I really do not want to respond to this but your information is so wrong, and clearly off.

Foreign investment was already in a down trend from 2013, investment kept somewhat stable in the 2015-2019 periode. Until a little unknown virus hit the world, resulting in a total shutdown / disrupted market.

There was a peak in 2021 as of the resulting reopening of the Chinese market, you know, kind of hard to do business when your companies employees need to spend a month in a hotel in quarantine. So there was a strong recovery in those years, a known effect from the 2020 pandemic and the eventual recovery.

I do not even know where you get the peak in 2022 when it was 2021. 2022 was barely on the level of te 2015-2019 periode. In 2023 it ended up crashing to 1990's level of investment.

And has been a negative FDI for the past 3 years. That means more investment is being pulled out of the country, not in anymore.

So unless you want to dispute macroeconomic data, your information is highly off. I am not even going to touch the whole IP comment "massively overblown" as there are plenty of reports on how it absolute not overblown.

No offense but your comments read like a propagandist. I let the readers make up their minds, as my information can be easily google on.

> Foreign investment was already in a down trend from 2013, investment kept somewhat stable in the 2015-2019 periode. Until a little unknown virus hit the world, resulting in a total shutdown / disrupted market. [...] I do not even know where you get the peak in 2022 when it was 2021.

You're just wrong about this, as you can see by looking at a chart of FDI into China: [0]. The story from 2013 to now is not "downward trend." 2013 was a peak year. Then FDI declined through 2017, before generally increasing until 2021, when it reached its all-time peak. You're right that I got the year wrong: the peak was in 2021, not 2022. But the story you've told of there being a steady decline since 2013, due to foreign companies not wanting to share IP, is just completely disproven by the chart. It also doesn't make sense based on how Chinese IP sharing policies have changed over time - they have been rolled back in the last decade, not increased.

There have been huge changes in the world economic outlook and in financial policy since 2022. The US ended the zero-interest-rate policy in 2022, which has huge implications for global monetary flows.

> No offense but your comments read like a propagandist. I let the readers make up their minds, as my information can be easily google on.

Yes, readers can Google it (or look at the World Bank data below) and see that the story you're telling is just plain wrong. People in the US are exposed to such a crazy level of constant fear mongering about China that any kind of moderating comments are seen as propaganda.

0. https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?locat...

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